In Poland, on July 2. the program of state subsidies to loan installments, entitled “Secure credit 2%”. This initiative is aimed at increasing the availability of housing for Polish women and men through their access to mortgage loans with low interest rates. Although this program has raised high hopes in society for improving the current housing situation, many experts point to limitations and questions about its effectiveness. See why.
Cheap credit is good because it is good and cheap
Under the program, mortgage loans will be granted with an interest rate of only 2 percent. per year and his the maximum amount will be 500 thousand. for a natural person or 600,000 for couples. The program is intended for people up to 45 years of age, both singles and married couples as well as couples in informal relationships, when they have at least one child. Own contribution cannot be higher than 200,000. zloty. In the absence of own contribution or incomplete contribution, it will be possible to use the guarantee of Bank Gospodarstwa Krajowego. This loan can be used for purchase apartments from both the primary and secondary market. Program safe 2% loan. does not impose any restrictions on prices per square meter of housing.
The interest rate of 2% is a big difference compared to market rates, where the mortgage can exceed this rate many times. Theoretically, lowering the loan installments will allow many Poles to access their own dream apartment. Theoretically, but more on that in a moment.
The introduction of the program was the result of cooperation between Bank Gospodarstwa Krajowego (BGK), the Polish Bank Association and the Ministry of Development and Technology. 21 banks that have concluded an agreement with BGK will grant “secure loans” and introduce them to their offer. PKO BP, Bank Pekao, Alior Bank and VeloBank are among the first banks to declare their participation in the program from the very beginning and start handling applications from July 3, 2023. Other banks that have decided to participate in the program plan to introduce “safe credit” to their offer a bit later.
Prior to the introduction of the programme, Bank Gospodarstwa Krajowego conducted workshops and training for employees of the banking sector in order to prepare them for granting “safe loans” and servicing housing accounts. In the coming days, it is planned to continue the training process to standardize standards and good practices across the sector. The exact terms of cooperation between BGK and commercial banks are specified in the agreements concluded between these institutions. Agreements, among others regulate the terms of payment settlements.
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A safe 2% loan may turn out to be a dud (like its predecessor)
According to experts, however, “Safe 2% credit” may not work out. Let’s start with simple facts: it replaces the existing program “Mieszkanie Plus”, which did not achieve its goals and became a kind of problem for the government (increasing housing construction and increasing the availability of real estate for Poles).
Real estate analysts point out that, firstly, the housing situation in Poland is not as bad as it is sometimes made out to be. The proportion of young people living in overcrowded housing has fallen in recent years and the proportion of people with high housing costs is below the EU average.
Secondly, Poles own flats more often than other Europeans. The price of a square meter of flats in Poland has not been growing rapidly and has maintained a decent relation to the average salary in recent years. However, for those who rent apartments, the costs can be significant, especially for young people in large cities.
“Safe Credit 2%” may, however, bring some benefits to a small group of people in a short period of time. That’s for sure. The only question is at what cost? The program will mainly affect the demand side, a aid directed in this way may lead to an increase in housing prices. In fact, it’s almost certain. The prices of a small or medium-sized apartment show increased activity, and the effect is likely to increase as the program continues. So where are the benefits? In the long term, the program is therefore unable to solve the basic problems with the housing market, but only temporarily eliminate some problems and create others.
According to some, a better solution would be to act on the supply side, i.e. to invest the public sector in the construction of affordable, good quality housing. In this way, the demand for housing investments from private entities could be reduced. But are you sure? This was the goal of the already withdrawn Mieszkanie Plus programme. So maybe there is simply no good solution and the state should not interfere with the free market?
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2023-07-02 19:05:31
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